I want to build my own house. Now what?
Buying land and building your house is a bit of a process because there are so many things to consider. Here is a list to get started.
Find a Land Lender
If you don’t have the cash to purchase the land outright, start by looking for a lender that will loan on unimproved land. Not all lenders will. Try starting with your Credit Union. If you are able to find a lender that only requires 10% down, that is a good goal to strive for. Not many will go below 20% down.
One of the most important things is choosing the right lender with the right down payment request. The amount of land lenders isn’t as abundant, but you should check into a few. Try starting with your Credit Union.
When searching for a lender, here are several items to consider:
- Does the lender offer competitive interest rates?
- When can you lock in the interest rate?
- What fees does the lender charge?
- What down payment are they requiring? It is usually 20%, but some might do as low as 10%.
- Will the lender work with your credit score?
- How much of the process is online versus in person?
- How fast can the lender close you?
- Does the property have to meet certain requirements?
Once you decide on the lender, get pre-approved so that when you find your dream property, we can make an offer!
Design Your House Plans
Next, you will need building plans for your house. These can be created by an architect that you hire or you may be able to buy some online. Be sure your plans work with the subdivision Deed Restrictions. Some Home Owner Associations will require prior approval, so be sure to do this if it is required.
Purchase Your Property
Now let’s find your land. Important items to consider when looking for your perfect property include: flood zone, restrictions, easements, septic and well requirements (check out the post on this), and city / country permitting fees and guidelines. I will create a custom e-mail for you to capture properties in the areas you wish to watch.
Locate Your Builder
Next you find your builder. Be sure to get references from previous clients. View their homes to see their quality and discuss the timeframe. Again, some neighborhoods and some loans have a timeline, so this is important. Have them put in the agreement if they are unable to meet the timeline, they will pay the fines. Today, the cost to build is approximately $132 and up per square foot. There are also permits involved in building. You need to confirm your builder understands what permits are required and that they will be “pulling” them. You do not want to have to pay fines for this not being done or worse, have to tear down your new structure. You also need to confirm what inspections they will be doing. Usually, the city or county will require an inspection before the sheetrock is installed. The electrical, plumbing, and HVAC also needs to be inspected, so confirm your builder is having this done. Sometimes the builder will have you “pull” the permits and schedule the inspections. Either one is acceptable, just be sure to get this agreement is in place before starting.
Get the Construction Loan
Once you have your property and your building plans, you will need to do a construction loan. Your lender should be able to roll your land (if you still owe on it) and home into one loan, because no one will lend when the land does not have a certain amount of equity in it.
Do Your Homework
Before you start building, check on insurance. If you have bought the property in a Flood Plain, you can confirm with insurance that if you “elevate” or “build up with dirt”, that you can eventually get your house to the preferred flood zone. It is important to determine this before you start building. Get quotes and everything in writing!
Now that you have everything lined up, it’s time to start building your dream home!